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NMW Fact Sheet

NMW Fact Sheet



National Minimum Wage: What you need to know

This is just a brief factsheet giving you the essential details of the National Minimum Wage and what it might mean for your business.

What are the rates of pay?

Type of Payment

From 1 April 2017

National Living Wage for workers 25 and over (minimum rate per hour)


Workers aged 21 and over (minimum rate per hour)


Workers aged 18-20 and those aged 21 and over doing accredited training in the first six months of employment* (minimum rate per hour)


Workers aged 17 and under (minimum rate per hour)


Apprentices under 19 (or aged 19 and over in the first year of their apprenticeship)


Accommodation offset amount

£6.40 per day

As of 1st April 2017 there was a rise in the National Minimum Wage. Outlined below are the current rates you should be paying your workers and the rates you should be paying from 1st April 2017:


What happens if the National Minimum Wage increases mid-week?

The NMW is set to increase on a Saturday. The NMW legislation deals with the situation where the NMW is changed during a pay reference period. This states that the hourly rate at which the worker is entitled to be paid, in respect of work done in any pay reference period, is the rate in force on the first day of that period.

For example, if you use a weekly pay reference period beginning on a Monday, then the rate in force on Monday 29th September 2015 will apply for that whole pay reference period. So, the new NMW will apply from 6th October 2015 and for future pay reference periods.

Who does National Minimum wage apply to?

NMW applied to a worker who:

  • Is working or ordinarily works in the UK under a contract
  • Has ceased to be of compulsory school age

“Worker” does not include…. Limited company contractors and those who are genuinely self-employed. Such people will have to be able to produce a certificate of self-employment from the Inland Revenue but this on its own will not necessarily exclude a worker from entitlement. A tribunal would have to consider how the worker is paid, whether he controls his time and the operation of his work and whether he works exclusively for one employer.

Agency workers: NMW specifically applied to worker supplied by an agent to work for a client under an arrangement between the agent and the client. Where no contract is given to the worker, the person responsible for complying with the Act and Regulations will be whoever is responsible for paying the worker.

How do I calculate if it is being paid?

NMW= total gross pay less any reductions applicable, and divide the resulting figure by the total number of hours of timework, salaried hours work, output work or unmeasured work worked, during the pay reference period.

The “reductions” to be subtracted from the total amount of the remuneration in the pay reference period are;

  • Money payments paid in respect of work carried out in a previous period
  • Payments for periods of absence of an amount less than the worker would be entitled to if he were working (e.g. where a worker only received SSP rather than his usual pay during absences due to sickness)
  • Any overtime of shift premia
  • Allowances other than those attributable to the performance of the worker in carrying out his work. E.g. payment for dangerous working conditions
  • Tips, service or cover charge payments not paid through the payroll (NB in July 2003 a Bill was laid before Parliament to amend the Regulations so that no tips, whether paid through the payroll or not, should be counted for NMW purposes. This is now law)
  • Any money payment paid by the employer to the worker to meet expenses incurred in connection with the workers employment e.g. travel/hotel expenses
  • Any deduction or paymentin respect of the worker’s expenditure in connection with his employment e.g. cost of uniform, protective clothing or purchase of tool
  • Any deduction made by or payment to the employer for his own use and benefit (e/g/ deductions for pension contributions or the cost of meals)
  • Living accommodation charges in excess of the lower figure produced by using the “daily rate” calculations


How is the NMW enforced?

Failure to pay the MNW is a criminal offence which can lead to an enforcement officer from HMRC issuing the employer with a notice of underpayment.

What are the penalties for not paying the New Minimum Wage?

  • The penalties imposed on employers that are in breach of the minimum wage legislation are 200% of arrears owed to workers. The maximum penalty is £20,000 per worker. The penalty is reduced by 50% if the unpaid wages and the penalty are paid within 14 days. HMRC also name and shame employers who are penalised.

For more information please do not hesitate to get in contact with the Merit team who will be happy to help on 01256 471 508 or you can email